The problem with three US$1T+ IPOs in one year is that the liquidity has to come from somewhere.
ChatGPT has entered the chat. On Monday, OpenAI filed confidentially for an IPO, joining rival Anthropic and Elon Musk’s soon-to-be listed SpaceX ($SPCX) in a race to the public markets.
They’ve got some staggering valuations:
SpaceX US$1.77T
Anthropic US$965B
OpenAI US$852B
When a company IPOs, new shares enter the market, and investors must pay cash to buy in. Three offerings of this size could see fresh capital flowing out of existing investments.
Institutional investors might start rotating out of existing holdings, and retail investors could be drawn out of smaller stocks in the same sector. Money chasing the new shiny thing typically leaves last year’s models with less buying support.
Bitcoiners are blaming BTC’s current ‘death spiral’ on that exodus of capital. Gold and silver bulls are in the same boat. But in the Wall St universe, jitters appear more contained. The S&P 500’s tech-led slide on Tuesday revealed 300 stocks were actually in the green. In fact, nine of eleven sectors actually traded higher.
Profit taking was centred around stocks with the biggest YTD winning streaks. Photonics names Lumentum ($LITE) and Coherent ($COHR) shed over 18% in the last week. Volatility also came for the newest S&P 500 entrant Marvell ($MRVL) after a 50% run over six days.
Nvidia ($NVDA) CEO Jensen Huang thinks the weakness in tech is a reason to celebrate. On Monday he said ‘everybody should be very excited’ because ‘now you can buy at a discount.’ Of course, he has every incentive to buy-the-dip in the AI companies Nvidia helped create. It might be a different story for the everyday investor.
Huang talked to the press amid a busy week in South Korea, where he’s signing deals with SK Hynix execs over beer and chicken dinners. SK shares are up 200% YTD, and make up 27% of the Roundhill Memory ETF ($DRAM).
Trading volume has stayed elevated, even as the VIX sits above 19. And based on this week’s market action, one thing is clear: mega-IPOs might be around the corner, but for most parts of the market, it's business as usual.
This is not financial advice nor a recommendation to invest in any of the securities listed. The information presented is for general information purposes only and intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. The value of your investments can go down as well as up and you may receive back less than your original investment. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
Markets Analyst
Samy is a markets analyst at Stake, with seven years of experience in the world of investing, working across roles in private banking, venture capital and financial media. She has a Master’s degree in Finance and Data Analytics from The University of Sydney Business School.
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